Mott Community College
Board of Trustees
Meeting
June 22, 2009
BUDGET RESOLUTIONS
FINAL FY08-09 AMENDED
BUDGET:
General Fund
2
Final FY08-09 General Fund Budget
Summary
07-08 Actual
Revenues
08-09 Amend #1
08-09 Amend #2
$ 70,832,466
$ 71,165,658
$ 72,055,509
70,523,814
71,009,066
71,899,591
Expenditures
Excess Revenues Over
Expenditures
$
308,652
$
156,592
$
155,918
Fund Balance – Beginning
$
6,289,572
$
6,598,224
$
6,598,224
Fund Balance – Ending
$
6,598,224
$
6,754,816
$
6,754,142
Fund Balance Percent*
9.36%
9.51%
9.39%
*Target = 5% - 10% of Expenditure budget
3
Final FY08-09 General Fund Budget
NET RESULTS OF AMENDMENT:
FUND BALANCE :
$674 or -.43% less than
January Amended Budget
6/30/09 projected to end with $155,918 surplus, for
total of $6.75 million
4
Reserves as Required by Board Policy
#3930
_____________________________________________________________________
General Operating (01) Reserve
Requires 5-10% of annual operating expenses.
08-09 Amended Budget reserve of 9.39%
Maintenance & Replacement Fund (72)
Requires 1-3% of College depreciated assets or $3 M
08-09 Amended Budget reserve of $2 M
Amount needed to reach 3% - $1 M
Building/Site Fund (78)
Requires 1-3% of College depreciated assets or $3 M
08-09 Amended Budget reserve of $3 M
5
Navigating Our
College’s Finances
6
What is Visible
7
What Lies Beneath..
8
PROPOSED FY09-10 BUDGET
9
RELEVANT BOARD POLICIES:
_____________________________________________________________________
3100 Budget Adoption. “Budget revisions will be
brought forward for Board action as necessary, but
not less than twice per year in January and June.”
3920,3930 Financial Stability, Fiscal Reserves. “The
College will designate and set aside appropriate fund
reserves to support plans for long-term capital and
operating commitments.”
5100 Compensation Philosophy. “The Board has
determined based on long-term budget projections,
and other related budget data, that total compensation/
benefits should not exceed 77% of the total operating
budget.”
10
STRATEGIC PLAN
_____________________________________________________________________
7-0. Budget/Finance
7-1. Focus on controllable revenues and costs to sustain
our current reputation and facilities and provide funding
for strategic priorities
7-2. Establish short and long-term budget and finance
priorities that provide a balanced approach to the needs of
a learning organization with the flexibility to realign
resources
7-3. Implement a comprehensive strategy to address the
long-term deficit which enables us to continue to provide
affordable high quality education
11
STRATEGIC INITIATIVES
FOR 2009-2010
-Allocation for 09-10 is $112,000 for AQIP
- Additional $150,000 allocated for Department/Division
level planning.
Current AQIP Action Projects :
-Advising for degree completion and transfer students.
-Data Integration
12
PROPOSED FY09-10 BUDGET
SUMMARY
No Change in Budget Principles.
Uncertainty still remains.
Budget must support Strategic Plans
Minimize/offset impact on Students
Avoid overall reduction in Staffing
Maintain Fund Balance/Reserves
Maintain flexibility in Budget
Balanced Approach
13
$28,000,000
$26,000,000
$24,000,000
$22,000,000
$20,000,000
$18,000,000
$16,000,000
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$0
2
03
0
2
20
0
Grants and Other
2
04
0
2
30
0
2
05
0
2
40
0
2
06
0
2
50
0
State Appropriations
2
07
0
2
60
0
2
08
0
2
70
0
Property Taxes
2
09
0
2
80
0
Tuition and Fees
14
17,000,000
6900
16,500,000
6700
16,000,000
6500
15,500,000
6300
6100
15,000,000
5900
14,500,000
5700
14,000,000
5500
13,500,000
5300
5100
13,000,000
4900
4700
12,000,000
4500
19
99
-2
00
0
20
00
-2
00
1
20
01
-2
00
2
20
02
-2
00
3
20
03
-2
00
4
20
04
-2
00
5
20
05
-2
00
6
20
06
-2
00
7
20
07
-2
00
8
20
08
-2
00
9
12,500,000
State Appropriations
Enrollment (FTE Students)
15
Initial General Fund Budget 2009-2010 Expenditures by Activity
Utilities and
Insurance
4.27%
Operations and
Communications
7.94%
Capital Outlay
0.30%
Transfers
4.56%
Materials and
Supplies
2.98%
Salaries and Wages
52.48%
Contracted Services
6.55%
Fringe Benefits
20.93%
16
Initial FY09-010 General Fund Budget
Summary
08-09 Amend #2
Revenues
Initial 09-10
$ 72,055,509
$ 70,968,187
71,899,591
70,901,002
Expenditures
Excess Revenues Over Expenditures
$
155,918
$
67,185
Fund Balance – Beginning
$
6,598,224
$
6,574,142
Fund Balance – Ending
$
6,754,142
$
6,821,327
Fund Balance Percent*
9.39%
9.62%
*Target = 5% - 10% of Expenditure budget
17
PROPOSED “OTHER FUNDS”
FY09-10 BUDGETS
Main Point is Impact on Operating Budget:
Designated Fund $2.3 Million Revenue Budget
(Scholarships, Student Enrichment, Copy Machines, Paid Parking,
Designated Technology Fee)
Auxiliary Enterprise Fund--$692,500 Budget
$425,050 Net “profit” supplements General Fund
(Catering, Vending, Bookstore, Computer Lab Printing, Lapeer Campus
Auxiliary)
18
PROPOSED “OTHER FUNDS”
FY09-10 BUDGETS
Main Point is Impact on Operating Budget:
Debt Retirement Fund—no General Fund impact
Millage Rate stays same, at 0.69 mill; Property taxes restricted
Capital Funds—repair, upgrade of buildings, equipment,
technology, vehicles.
Instructional Technology Fee = $1.28 Million per
year
$2.71 million per year planned transfer from General
Fund.
19
20
Current Economic Environment
Dow Jones Industrial Average declined 46.8% between December 2007 and
February 2009- The largest 14 month decline since 1938 (Senate Fiscal Agency)
State of Michigan Projecting deficits of $931 Million in 2008-2009 and $1.5
billion in 2009-10 (Senate Fiscal Agency)
Unemployment Rates in April 2009 (Senate Fiscal Agency)
State of Michigan
12.9%
Flint
14.2%
Home prices dropped 20% from September 04 to November 06 and another 21.9%
from December 07 to March 09 (S&P/Case-Shiller 20-city seasonally adjusted
composite)
Housing Starts down 54.2% compared with April 2008, and 79.9% from record
high in January 2006 (Senate Fiscal Agency)
21
Projected General Fund Deficit would be $45 Million at
end of FY15-16, if current trends continued (Revenue
growth of .55% vs. expenditure growth of 3.5%)
Based on an average projected gap of $8.7 million per
year to be filled with budget-balancing solutions
Short-term savings and flexibility continues to be key
Long-term strategy of managing total compensation
costs
22
7 Year Forecast at June 2009
Forecasts:>>>>>>>>>>>>>>>>>>>
Amended
Budget
0808-09
Initial
Budget
0909-10
1010-11
1111-12
1212-13
1313-14
1414-15
1515-16
Revenues
Tuition and Fees
27.6
28.8
29.8
30.4
30.9
31.2
31.5
31.8
Property Taxes
24.4
23.5
21.9
21.0
20.8
20.8
21.0
21.4
State Appropriations
15.2
15.0
15.0
15.0
15.2
15.4
15.7
15.9
4.0
3.7
3.7
3.8
3.9
4.0
4.1
4.1
71.2
71.0
70.4
70.2
70.8
71.4
72.3
73.2
1.2%
(0.02)%
(.08)%
(.03)%
0.8%
0.9%
1.2%
1.5%
Salaries
36.7
37.5
38.7
39.8
41.0
42.1
43.3
44.5
Fringe Benefits
14.8
15.0
15.8
16.7
17.6
18.5
19.6
20.6
All Others
19.5
18.4
18.9
19.5
20.1
20.7
21.3
22.0
71.0
70.9
73.4
76.0
78.7
81.3
84.2
87.1
1.2%
(1.4)%
3.6%
3.4%
3.4%
3.5%
3.5%
3.5%
Surplus/(Deficit):
0.2
0.1
(3.0)
(5.8)
(7.9)
(9.9)
(11.9)
(13.9)
Fund Balance
6.8
6.8
3.8
(2.0)
(9.8)
(19.7)
(31.7)
(45.6)
All Others
Total Revenue
Revenue Increase (Decrease):
Expenditures
Total Expend.:
Expend. Increase(Decrease):
Note: the forecast illustrates performa data if current trends were to continue. The College is obligated to
balance it’s budget each year and will take necessary steps to do so.
23
$34,000,000
$32,000,000
$30,000,000
$28,000,000
$26,000,000
$24,000,000
$22,000,000
20
08
-2
00
9
20
09
-2
01
0
20
10
-2
01
1
20
11
-2
01
2
20
12
-2
01
3
20
13
-2
01
4
20
14
-2
01
5
20
15
-2
01
6
$20,000,000
7 Year Forecast
Historical Average 4%
24
CAPITAL FUNDING
Link to Mission and
Strategic Plans
¾
MCC’s mission statement directs the
college to…
“maintain its campuses, state-of-the-art
equipment, and other physical resources that
support quality higher education. The college
will provide the appropriate services,
programs, and facilities to help students reach
their maximum potential.”
Typical Asset Cycle
Design &
Engineering
Delivery &
Installation
Strategic &
Project
Planning
Commissioning
Operation & Maintenance
MCC Asset Value vs Time
(Asset Life)
Asset Value
Planned Maintenance
points
New
Premature
End of Life
End of Life
Extended Life
Deferred Maintenance
¾ Planned maintenance not performed
when scheduled
¾ Usually lack of funding – carried as a
liability
¾ Leads to earlier asset replacement due
to premature end of life
Deferred Replacement
¾ Planned asset replacement not performed
when scheduled
z
z
Usually lack of funding
Carried as a liability on the books
¾ “Run-to-failure” mode of operation
z
Uses capital that should be scheduled for
other purposes
Capital Asset
Funding
•2004
•$65M Needs
•$45M Bonds
•$13M Operating
Commitment
•$7M Student Tech Fees
•Current 10 year needs $78
million
•Taxable Values Declining
• Availability of Bonds?
•Approx. $1.3 million in
tech fees annually
Mott Community College
Board of Trustees
Meeting
June 22, 2009
Questions or Comments?
For More Information:
Details and Provided with Board Resolutions 1.63 and 1.64
Larry Gawthrop, Chief Financial Officer (810) 762-0525 Larry.Gawthrop@mcc.edu